Question

True or False

QUESTION 2

1. Barriers to Entry include, patents, and exclusive access to certain inputs.

QUESTION 3

1. Monopolistically Competitive firms are firms that borrow features from Monopoly and Perfect competition, in that like Monopoly they make long run economic profits, and like competition, each firm faces a perfectly inelastic demand curve.

QUESTION 5

1. The prisoner's Dilemma game illustrates the fact that sometimes even when cooperation may yield bigger gains, because of lack of trust, non cooperation or defection might result.

QUESTION 6

1. Firms in a monopolistic competition make positive economic profit in the long run.

QUESTION 7

1. In a market characterised by a few firms selling similar goods, the bid to create a product differentiation can lead to wasteful expenditures of advertising.

QUESTION 8

1. A monopolistically competitive market is fully efficient such that each firm operates at full capacity at all times.

QUESTION 11

1. In a simultaneous move game, the players do not get to observe what the other players played, whereas in sequential move game, there is a possibility of some players getting to observe what was played before them and then reacting to that.

QUESTION 15

1. Between a monopoly and a monopolistic competition, the monopoly has a perfectly inelastic demand curve, whereas a  monopolistic competition has a perfectly elastic demand curve.

Answer 1

Question 2

Answer : True

Barriers to entry are the obstacles which make difficult to enter into a particular market.These hindrances restrict a particular business in entering into a new market. These barriers include patents and copy rights, government regulations and access to certain inputs such as technology,start up costs etc.

Question 3

Answer: False

In a monopolistic competition firm earn profits in the short run until reaching break even and in the long run demand will decrease and average cost will increase which results in zero economic profits.

QUESTION 5

Answer : True

The prisoners dilemma is a paradox in which the outcome by cooperating with each other would have given a better solution to both the participants. But since they act as per their own interests they both choose to protect themselves at the expense of the other participant.There is a lack of cooperation and trust between both the participants.

Question 6

Answer :False

In the long run the monopolistic competitive market the firm demand will decrease and average cost increases thus resulting in zero economic profits.

Question 7

Answer: True

Since there are only few firms selling similar goods it will be a wasteful expenditure to create a bid for product differentiation.Even though the products are differentiated there will be not much increase or decrease in demand for the product.

Question 8

Answer: False

In a monopolistic competition the firm takes the prices charged by its rivals as a base and uses its capacity until its products are available below it's rivals price.Unlike in perfect competition firms that are monopolistic competitive maintain spare capacity.

Question 11

Answer: True

In game theory ,a simultaneous game is a game in which each player plays his game and chooses their action without the knowledge of the actions of the other players.In sequential game players make moves at different me periods.The action or game played by one player influences the game played by other player.

Question 15

Answer: True

In a monopolistic competitive market the demand curve is elastic since there is competition between sellers and in monopoly market the demand curve is inelastic since there is only one seller.

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